Marketing Memos

Who would have thought Microsoft could be cool?

Not Microsoft the company, the product line or substandard tech support. No, Microsoft marketing is cool because they engineered a reverse promotion campaign that leveraged a competitor’s positioning, used it to attack their weakness and amplify a Microsoft strength all in one sweep.

That’s cool.

Anyone with a pulse is familiar with the great ad campaign designed by Apple, pitting a dowdy looking actor as a generic PC, and a young hipster (Justin Long in real life) as a Mac. Justin played the Mac role as low key, friendly, effective, peaceable and, in a sub dude way, cool. Justin was also the voice of Alvin in Alvin and the Chipmunks, so we have to subtract three ‘cool points’.

For a company built primarily on image and vendor lock-in, Apple did a great job. Their ads were memorable and also provided a method for serially picking on the weaknesses of Windows. They made being a Mac cool and being a PC a crime against humanity. Combined with the everlasting Windows Vista fiasco, the campaign seriously damaged Microsoft sales, brand and market mindshare.

Microsoft used judo.

Like most take-down martial arts, judo recommends using your opponent’s weight against them. Don’t bother hitting a 260 linebacker in the face because it might merely amuse him. Instead let him charge you and then help him convert his forward momentum into downward momentum. Once he in on the floor and you are standing over him you can then either run like hell or execute a ‘ground-and-pound’ attack.

Microsoft grounded and is pounding Apple.

Take the basic premise of the Apple ads, which paraphrased is “Macs are cool and PCs are a headache.” These concepts were communicated by actors as proxies for operating systems and hardware. In the process Apple made ‘PC’ a dirty word, which was their intent. They wanted to position Macintoshes as the un-PC. Apple’s ad campaign was so successful, that they created momentum.

Microsoft responded with their “laptop hunter” ad campaign, and in doing so Microsoft used Apple’s momentum against them, changing the basic conflict between Apple and Microsoft. Apple said Macs are cool, but Microsoft said PCs are smart. The average consumer knows they will never be cool, so being smart is an attractive option.

Let us itemize things Microsoft marketing did to judo Apples ads:

• Apple used actors – Microsoft used real people in real stores (Fry’s no less).
• Apple picked on Windows weaknesses – Microsoft promoted their strength, namely getting more bang for the buck (smart consumerism).
• Apple only sold against Windows, not promoting their strengths – Microsoft buyers are shown listing their required features and “getting what I want” for less.
• At the end each of those real consumers says “I’m a PC”.

Central to all of this is that Microsoft took Apple’s momentum in creating a negative “I’m a PC” stereotype and used it to sell Windows market strengths. When paired with allegedly real consumers shopping, comparing and choosing PCs, Apple’s momentum becomes Microsoft’s momentum. Using real consumers also eliminated the advertising advantage Apple obtained with actors (and given that Justin stared in such epic cinematic endeavors as Happy Campers and Idiocracy, we can take him only so seriously).

In promotions, perception is everything. Apple had a good start by amplifying dissatisfaction with Windows weaknesses, but they did not capitalize on their own momentum by shifting the focus of their ads to Mac strengths. Microsoft was able abscond with that momentum and used it to sell Windows market strengths with more authenticity.

The genius was that they did not stand toe-to-toe with Apple and slug it out. They hijacked Apple’s efforts and picked their pockets in one smooth move.

That’s smart and cool.

Many clients have come to me complaining that they hit a plateau – that sales and profits had quit growing. We have helped many of our clients identify the barriers they faced and navigate to new levels of success.

Others remained stuck, mainly because they were too stubborn to listen.

It is common for start-ups to hit seemingly invisible plateaus. Like a rock climber on a virgin cliff, they cannot see their way around outcroppings and boulders, and they aren’t agile enough to dodge eagle droppings hurtling in their direction. In nearly every case, these plateaus are artificial and solvable, though the very genius that launched the company is often the plateau itself.

I offer as example one client we initially engaged six years ago. Silicon Strategies Marketing performed some primary (and I dare say groundbreaking) research into the psychology of their targeted buyers. Throughout the research, one variable was clearly a game changer – a clear path to recruit new customers, both within divisions of existing clients and within new enterprises.

Six years later they still have not executed on those findings and are at about the same revenue level (the fact that the recession has not materially reduced their revenues indicates that our rebranding effort worked well for them).

Start-ups plateau for a number of common reasons, all of which can be fixed but often are not. The main plateau points are:

Visionary blindness: Often it is the company founder, CEO and president who are the biggest impediments. The boss was the original visionary, and (s)he perceived the product and the market in one specific way. Indeed, their company’s early success may be attributed to their specific market vision. The problem is that once they have met the limited market/product vision the founder had, he retards or restricts expansion. New segments, competitive threats and key trends may well go unanalyzed because they fall outside of the visionary’s view. When a CEO shoots down every staff recommendation because of his “experience”, he is the problem.

Segment saturation: Despite common wisdom and endless preaching, many start-ups never segment their markets wisely. Start-ups routinely wander into one segment, accidentally growing a whole product solution for that segment alone. They never exploit adjoining segments, much less carefully plan the necessary steps to do so. People and companies enjoy comfort, and expanding into unfamiliar territory is uncomfortable. Too often organizations will try to grow their already saturated segment. Competitors who do know how to map and invade segments will eventually create permanent plateaus for the original innovator.

Marketing myopia: Products, competitors and markets change. Continuing to market to the same people in the same way over time is deadly. Like humans, marketing people get lazy. They lose the drive to take chances and innovate their campaigns. There is a long history of companies that kept innovating products but quit innovating marketing, and thus never even expanded even their installed base.

SuSE Linux in North America had flat revenues when Silicon Strategies Marketing began advising them on marketing strategy. In the late 1990s, having flat revenues in the Linux business was preposterous. Red Hat was growing at quantum speed in North America, and SuSE was doing well in Europe. But in North America, SuSE sales were stagnant. They had plateaued in a high growth market.

SuSE’s suffering came from their inability to understand their regional market position and how to work around it. In both Europe and North America, techies were dragging Linux into the enterprise. In North America, Red Hat had the commanding respect and loyalty of the techie caste. For years SuSE had attempted to tempt North American techies as they had in Europe, and with zero success. Red Hat’s lead in mindshare was too steep and SuSE’s management could not see past their original, techie-focused strategy.

We changed SuSE’s strategy on two fronts: who they sold to and what they sold. More fundamental shifts in product marketing strategy could not be made. But the net effect is that sales went from flat to 5,000% growth in two years.

While Red Hat continued to promote to techies, SuSE switched gears and started courting IT executives (see Silicon Strategies Marketing premier paper from that era on what CxOs Think about Linux). Research told us that executives had intellectually bought into Linux as a strategic infrastructure element going forward. It was our job to convince CxOs that SuSE was the better choice.

Since executives are paid to think strategically, they were already thinking several years down the road. So instead of aping what Red Hat was saying (Linux saves money, and Open Source is better) we caused SuSE to talk about how Linux was part of IT’s long-term strategy, which included human resources issues, technology consolidation and commodity infrastructure. When SuSE demonstrated to CxOs that they knew what CxOs were thinking, those executives put SuSE on the short list. SuSE also sold IT execs on strategic partnerships, showing that major vendors like IBM and Oracle were our friends, which was a major selection criterion for CxOs.

The net effect was that if bitheads in an account could not convince executives of the technical superiority of Red Hat over SuSE (which did not exist) then the IT execs mandated SuSE. Red Hat continued to sell to the bottom. Recognizing that boulder, we maneuvered around it and sold from the top.

SuSE was lucky. At a critical juncture they found a new strategy (and also found a great PR firm whose media strategy complimented Silicon Strategies Marketing’s marketing strategy). Many start-ups are not so fortunate. They continue courting their original markets segments with their original product, using their original outbound marketing to fulfill the founder’s original vision.

And they die.

The marketing lesson is fairly simple. If your company has plateaued, then one or more people in your organization – perhaps your CEO – are seeing only the rocks in front of their faces, and not the chute that leads them further upwards. If you are stuck, get an outside opinion. It does not have to be an expert outfit like Silicon Strategies Marketing (though any other choice is obviously substandard), but it has to be a disinterested outsider who can look at markets, segments, buyer genotypes and promotions without the distortion of dangling from the same rope as your executives.

Agriculture is not a fad.

That is what I said to the CEO of a company who is applying high tech to crop yield management, and who just landed a healthy round of VC money to grow an already proven business model. Agriculture is not a fad and thus it is a market in which to invest if risk reduction is part of your planning.

VCs are much more risk adverse then they used to be. After the dot com bust many VC partners left the field and started working in the fields themselves (seriously, the number of former VCs who are now vintners is disturbing, and I suspect many are drinking their profits).

I scanned a dozen recently reported VC deals from the Sandhill.com web site. What I wanted to see was if VCs were chasing fads (as they did in the late 1990’s), were following trends (as they have leaned in the early 21st century) or if they were looking for start-ups rooted in the ongoing mechanics of the economy … or what is left of it.

8% of deals were betting on a fad
25% were following trends (mainly web video)
67% we anchored in traditional businesses and biz optimization

This is a rather staggering shift in the investment community, showing that risk is significantly less tolerated than a mere five years ago. It is no secret that lately VCs have waited for start-ups to prove their business model, management team and make some real sales. But after the dot-bomb shake out, they were still heavily investing in the unknown. Bets were placed on companies that demonstrated the three provisions (model, management, sales) but which had highly speculative futures.

Over time VCs added trends to the mix. If an investment partner felt there was a strong trend underlying the business (i.e., social networking, web videos, etc.), then funding was provided. However, VCs know that trends can be fickle – I’m still waiting for the market to ask why people waste time on Twitter.

The glacial shift in VC risk taking has now reached a state one step this side of paranoid. Capital is flowing, albeit more slowly, into technologies that are not fads or trends. We see funds flowing into document management, SAP implementation accelerators, recruiting management, advertising tracking, metro news online, content management, and policy/procedure/audit infrastructure. All established industries or optimization of industries.

Not a single fad in 67% of the deals.

What does this mean for start-ups? It means there are going to be very few speculative investments. If your products or service is breaking new ground, you better planning a bringing your own shovel. You will need to excavate and pour your own foundation before VCs are willing to finance your walls and roof.

On the opposite end, if your wares augment, enhance or redefine well established industries, then VCs will take notice. Take agriculture. Aside from making fire, there isn’t a more fundamental industry. People are fond of eating, and if they weren’t, we wouldn’t be having this conversation. The recent VC investments I noted – document management, local news, advertising – these industries are slightly less universal than food, but not by much.

Which means you’ll get great round-A funding if you can invent better fire.

Legendary are the disturbances between marketing and sales. Within the narrow geography of Silicon Valley, such interoffice disputes between the two camps have crippled businesses, caused collateral causalities and brought down small third-world governments.

And for no good reason.

I recently saw such a conflict up-close. With all my years in the game, this occurrence was nothing new and I could see the waters boiling long before other people did. The actors and stage setting were different, but the plot was the same as always. Groundhog Day with different dialogue.

To understand sales/marketing skirmishes, one has to understand the attitudes, perspectives and psychoses of either camp. Nobody is without sin, but there ain’t no saints either.

Perspective of importance

Though not unique, the sales director in the latest episode proclaimed in a mass inter-company email “Marketing exists to support sales.” Ignoring the utter arrogance of the individual, we can say that his notion is utter blather.

Both marketing and sales exist to meet the goals of the organization. One of executive management’s jobs is to keep corporate goals visible and to promote collaboration in the building of the company, not the building of empires and fiefdoms. Unilateral proclamations of hierarchical dominance are demented and dangerous.

More to the point, this sales director clearly does not understand marketing’s role. Marketing is responsible for defining products and then making them easy to buy. A great marketing executive will turn sales people into telephone order takers by driving up demand. In doing so the marketing department needs to get feedback from, then collaborate with sales and not just dictate to them. In shops where marketing is self-important and dictates down to the sales team is where you find collateral gathering dust on the shelves and the sales team inventing their own field marketing messages.

For all the naked arrogance shown by this sales director, marketing must admit to some as well. Marketing will always know the market better than sales. They will have keener insights into the intersections of segments, product features, genotype motivations and more. Yet this tells marketing nothing about the intimacy required in high context selling. Marketing strategy is a science. Selling is an art.

Perspective of time

Sales people, God bless their pointed little heads, have a one-fiscal-quarter perspective. Management ensures this by mandating quarterly quotas. Thus, anything involving the product, features and marketing that does not help sales achieve this quarter’s numbers is to salespeople a flaw. I once suffered a salesman screaming in a board room about how an insignificant feature – one that surveys showed was of little importance to customers – was killing all hope of sales success. When I questioned him – an act he took as an adversarial gesture – we discovered the feature in question was delaying one sale, and that if he could have landed that deal it would have made his numbers for that quarter.

Unlike sales, marketing thinks for the long-term. In mapping segment sequences and product feature roadmaps, marketing is not looking at the current quarter at all. Marketing looks one, five, ten years ahead. Marketing is looking at the forest, sales at the trees.

Frankly, marketing needs to look more closely at trees. The key place where marketing and sales needs to collaborate is in field marketing. Smart companies map each sales phase and each influential genotype. They create lead nurturing processes and sets of messages for each phase. Together, sales and marketing devise and perpetually revise a discipline for engaging prospects, be it on a web site or in the client’s office.

This almost ever happens. When marketing wants to look at trees, they do so with precision. Marketing understands the value of structure in how prospects are coaxed from one sales phase to the next, and the value of field testing messages and calls to action in a way that these structured processes are constantly refined.

Sales doesn’t. Structure, especially when imposed, is something the average sales person despises. Structure is the opposite of art, and sales people are artists. The times when structured field sales lead nurturing processes work is when the head of sales understands and endorses the process, then mandates his team to collaborate with marketing. In the absence of that, the odds are effective marketing/sales teamwork is predictably south of zero.

Perspective of intimacy

Sales is almost correct when they accuse marketing of not understanding the customer. Sales has very intimate relationships with customers, adjusting on the fly to the needs and wants of each. I have noted that sales and dating are similar processes – a dance where willing participants slowly move towards greater depth of intimacy, culminating in naked exchanges.

Marketing rarely does. Now marketing does know the customer … as a blob of faceless statistical aggregates. Marketing can tell you the mean demand-priority of feature XYZ for the key influencer genotype in the secondary market segment, and tell you this down to three decimal points with a 95% confidence interval. Yet they cannot name one member of that genotype in a recent sales engagement, or what his nuanced objections to feature XYZ were.

Marketing should be on the road one day each quarter. They should – at gun point if necessary – ride to several sales calls, smiling at the prospect but otherwise keeping their mouths shut. Doing so exposes them to the different buyer genotypes and their attitudes toward the product, the marketing behind the product, the sales process, field marketing messages and more. Naked interaction brings a taste of reality to the otherwise detached and academic predisposition of marketing strategy.

Sales should understand and appreciate something as well. Marketing does a lot of hard work eliminating sales frustration by selecting the right markets, segments, buyer profiles and genotypes for promotions. In other words, marketing keeps sales from wasting their entire work week chasing weak leads. Marketing’s strategy leads sales to the right battlefields and hands sales the right weapons. Marketing would benefit by seeing the battle up-close. You know the object of your conquest best when you can smell them.

Perspective of contribution

Both sales and marketing contribute to top line revenues. Sadly, sales tends to think they do it on their own.

I won’t criticize closers. They do the hard work of moving a lead toward a deal. But they do not do this solo. When marketing works well, the quality of the lead goes up, the ease of buying rises, and the sales person has an easier time of everything. If any sales people do not believe this, then I make them this challenge: do it on your own for a quarter. No marketing support. No lead generation. No lead scoring, filtering or profiling. Nada. Sales soon sees the strategic marketing perspective.

Perspective on pulling it together

The primary role of executive management is communications, with most of that geared toward leadership. Organizations with weak executives who fail to keep mission, objectives and teamwork as constantly communicated priorities hinder their own outfits. People constantly work together for common goals, be it in charities, political parties and even corporations.

This can include sales and marketing. In the absence of constant focus on goals, either or both of sales and marketing will myopically focus too intently on their specialty. It takes a strong CEO to set common objectives and refocus the energy of sales and marketing toward mutually supportive activity. This is the only way to break down barriers and egos.

And if that doesn’t work, 40 lashes for everybody in sales. That’ll teach ‘em.